We finished the week with our weekly export sales report coming out ahead of the opening one day delayed due to Monday's holiday.
Wheat sales were 408 T.M.T.; down 25% from the week prior; and 33% under our four-week average of 612 T.M.T. 110 of the total went to Asia, most likely low quality feed wheat. It is a neutral to negative demand indicator.
Corn sales were 974 T.M.T.; up 31% from the week prior; down 7% from the week four-week average of 1.044 M.M.T. Key Asian customers were in for 399 T.M.T., up for the fourth consecutive week. It is a good demand signal and shows a strengthening demand pattern. As you know, I believe corn demand on the world market, especially into China, will rise appreciably in the second, third and fourth quarter of the year. China's disastrous corn crop this year, with it's aggressive 2010 mandate to expand meat protein into their diet through expanding hog and chicken populations in need of feed corn, as well as their ethanol expansion, sets them up as a major importer and no longer an exporter.
Soybean sales were 203 T.M.T.; down 35% from the week prior; and 65 % under our four-week average. Key-player, China, was absent as their New Year's holiday entered, but sales continue to seasonally slow as South American crops come to market soon and capture world trade. When we enter next week, we will face several events. One, the end of the Lunar New Year's holiday. This brings key U.S. grain purchaser China and other Asian neighbors back buying grain and possibly playing catch-up on needs. Two, it was one year ago, the last week of February, brought us the seasonal lows in price for corn, beans and wheat, before a March 1 to June big rally.
The March rally is inspired by short covering and speculative buying ahead of two major reports. The March 11 U.S.D.A. final crop production number for 2009, and the March 31 planting intension report as the farmer's survey of what they intend to plant, comes to light.
Late this week , the Department of Agriculture's annual outlook forum was held. They suggested farmers would plant 3.5 M.A. More corn and a half million acres less beans. This certainly sets a bar for outside agricultural groups to spin their opinions off of, but farmers and government employees think very differently, leaving the March 31 report as the final word.
Charts set up next week like this:
March corn has first support at 3.50, then 3.42. As has been the case, I always note worst-case down side scenario is 3.24. Resistance is the same as last week: 3.68.; anything at 3.42 should be looked at as a buying signal to enter long July contracts lightly and add at 3.24. Or, buy July if March closes over 3.68.
Soybeans basis March find first support at 9.30, the 9.00 and 8.90. Buy July lightly if 8.90 to 9.00 are met, and or on a close over 9.65 basis March. We use the march charts to signal our july buys.
March wheat support lies at 4.80; 4.74 then 4.60. As I noted for the last two weeks, we need a close over 5.04 to turn charts bullish and confirm a seasonal low. If March hits 4.60 area, or a close over 5.04, be a buyer of July futures.
On the surface, it looks like the seasonal lows for the February and January period were put in the first week of February, yet next week still leaves room for one more break, if it is going to happen.